Local view for "http://purl.org/linkedpolitics/eu/plenary/2000-05-17-Speech-3-155"
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"The Commission's contribution to debt relief can be seen in the HIPC initiative. This was launched in September 1996 with the aim of helping to relieve the debt burden of the poorest countries that make adjustment efforts in a concerted way. It represents a coordinated effort by all donors including, in particular, multilateral creditors. It was the first time ever that the multilateral aspect had been addressed directly.
As regards other contributions to the HIPC Trust Fund, it may be worth noting that the draft budget by the US administration suggests a US contribution of USD 600 million which follows on from pledges made earlier and which corresponds to the share of HIPC calculated by the World Bank for the US. This draft budget needs to be passed in Congress and this is definitely facing some difficulties. In fact, it seems very doubtful that the US will deliver its share as planned.
The funds released by the Commission for the HIPC Initiative are subject to the same principles as other funds originating from the European Development Fund and the Commission is carefully involving the EDF Committee, that is Member States, at all stages.
Article 366(b) of the Lomé Convention in its present form imposes strict conditions on the possible use of EDF money. Politically speaking, it would not make sense to stop EDF financed projects in Article 366(b) countries and to provide them with EC
direct non-earmarked budget support, for example through HIPC debt relief mechanisms. It is the responsibility of the Commission to ensure that EDF money does not facilitate a
or provide additional budgetary room for manoeuvre to enable dictators to oppress their people. It is the very purpose of Article 366(b) in its present form to make things more complicated for countries breaching elementary human rights and good governance principles. This view has also been clearly expressed by the European Court of Auditors when commenting on these issues. Our hands are somewhat tied in this discussion on how we can accomplish these things in practice.
In the discussions, which led last year to the agreement on enhancing the HIPC Initiative, there was a strong consensus in the donor community that poverty reduction needs to be re-emphasised as a main focus of development efforts. The concept of the poverty reduction strategy papers was launched to provide a framework for mainstreaming poverty reduction in government and donor policies. It will require a country-specific approach to assessing a country’s position in development, poverty strategies and institutional capacity.
The Commission has expressed its strong support for this radically new approach initiated by the World Bank and the IMF. Country ownership is paramount for the development of these ideas and governments will have responsibility for both the design process and the final product. The Commission attaches particular importance to an open participatory process involving civil society, parliaments and all relevant international institutions and donors. Policies that address issues of social justice and equity are as central as economic policy to growth and poverty reduction. The Community is maintaining and stepping up its commitment to support macroeconomic reforms, social sectors, regional integration and sound economic management.
This is all needed in order to make sure that fighting poverty remains the central theme when we are actually improving the situation of these poor countries through the enhanced HIPC Initiative. I think that it is quite good that the Commission and the EU in general clearly stand out as the single most important contributor towards making this initiative actually work.
In 1999, on the occasion of the G7 Cologne Summit, ministers agreed to an expanded and more flexible initiative that will provide faster, deeper and broader debt relief. As a result of the proposed changes, the costs of this HIPC II Initiative are expected to increase significantly to some USD 27.4 billion from a previous estimated level of some USD 13 billion of HIPC I. In fact, the original estimate of the cost of HIPC I was around USD 8 billion only.
For the record, the Commission has already made a large contribution to HIPC I. The Council adopted, on 6 July 1998, a decision on the Community’s participation in the HIPC Initiative with regard to its claims, special loans and risk capital managed by the European Investment Bank for eligible ACP countries. As mentioned before, the Community, as a creditor, is only a small player in this discussion. Fortunately, we are mainly a provider of direct grant assistance and not loans.
We set aside EUR 40 million of interest accumulated on EDF funds which should cover the cost for the first six country cases. Community assistance for Uganda and Guyana was delivered in mid-1998 and early 2000, amounting to EUR 4.59 million and EUR 6.44 million respectively.
The Community has since decided to considerably enhance support for the HIPC II Initiative. At the annual meeting in Washington in September 1999, it was announced that the Community’s contribution would be in the order of EUR 1 billion. The Commission subsequently submitted draft proposals for decisions to the Joint EU/ACP Council and the EU Council which were adopted by the General Affairs Council on 6 December and by the Joint EU/ACP Council on 8 December.
It has to be borne in mind that the ACP countries’ agreement is required because it is EDF money that is being reallocated so their consent is needed as part of these decisions. At present, the Commission is in the process of finalising discussions with its Member States, the European Investment Bank, the World Bank and the African Development Bank about the main principles of the actual implementation of the Community support for the HIPC II Initiative, both as a donor and as a creditor. In June, it will present the relevant financing proposals.
The Community’s global contribution to the HIPC Trust Fund in its capacity as a donor will amount to EUR 680 million for qualifying ACP countries. EUR 670 million will be earmarked for the African Development Bank in order to cover its financing gap in the HIPC Initiative and EUR 10 million for the only non-African HIPC ACP country, Guyana.
The EUR 680 million Community contribution originating from the EDF will be channelled to the HIPC Trust Fund in 3 tranches taking into consideration effective financing needs as well as support from other donors. According to the information available, needs for the first tranche this year will be in the order of the magnitude of EUR 250 million. The first EC tranche will be paid in July. Besides these contributions to be financed from uncommitted EDF funds, a EUR 54 million contribution to the HIPC Trust Fund will also be made towards non-ACP HIPCs drawing on resources from the budgetary lines for Latin America and Asia. We want, in other words, to make sure that the EU participation in HIPC is global and in accordance with the figures in HIPC.
Finally, it must be stressed that the ACP/EU Council decision to reinforce the EC Structural Adjustment Facility by EUR 250 million will partly be used to provide interim relief to eligible HIPC countries belonging to the ACP. It is important to stress that the Community contribution to debt relief should not be seen as a substitute for contributions from bilateral donors. These are still needed in order to fully finance the initiative announced at the G7 Summit in Cologne. The expectation created a year ago was that the G7 countries would come up with additional resources."@en1
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